Under the rules announced by the Financial Services Authority, new banks in Britain will not have to hold as much capital initially as established rivals.

The regulator’s chairman Lord Turner told a UK parliamentary commission on banking standards the FSA will publish a document in coming weeks on removing barriers to entering banking.

Barclays, Lloyds, RBS and HSBC currently account for 80% of high street deposits.

Turner said: “In the past we have had pretty much the same capital and liquidity rules for new entrant banks as for existing players.”

Under the plan, new entrants would be able to start off with a core capital buffer of 4.5%, the starting minimum under new global rules known as Basel III.

The major banks would still have to maintain buffers of 9.5% to 10% because of their size.

New entrants would be given time to build up this buffer to 7%, the minimum required by the end of 2018 under Basel III.

The plans will also include a system of speedier authorisation for new banks and their officials.

However, Anthony Thomson, founder and former chairman of Metro Bank, which was set up in 2010, said the new plans were only “half the story”.

He said: “I have long held the belief that there are four key areas which new entrants find challenging and are significant barriers to entry: the high capital requirements that are required from day one when new banks do not hold any assets; the lengthy process of the bank authorisation process itself which can take up to two years, if not longer; the difficulty of getting onto the payments systems and the robust infrastructure needed by every new entrant, which can be extremely costly and deter many potential new entrants.

“Ultimately we need a package of reforms that will encourage more players to enter the banking market to break up the existing monopoly held by the Big Five and create much needed, and overdue competition, choice and innovation for consumers.”